Purplebricks sets date for possible lettings crisis showdown

Purplebricks has set a date for a possible showdown with shareholders over the agency’s lettings compliance crisis amongst other controverisies. 

It has announced that its annual general meeting will be on Wednesday September 14 in London and its formal business will concern its annual report and accounts for the year ending April 30 2022.

The sixth-largest shareholder in the agency - Lecram Holdings - has a 4.5 per cent stake in the firm and has become an activist investor. It is expected to use the AGM to repeat its call for chairman Paul Pindar to quit and for there to be more market experience at board level.

The company has revealed a drop in profits of 27 per cent to £42m, with revenues down 23 per cent to £70m in its most recent trading year. Pindar and his wife Sharon increased their holding in the firm to more than 14m shares or 4.59 per cent on the day those figures were made public.

Amongst the other problems hitting Purplebricks in recent months (during which time its share value has slumped over 90 per cent since its debut on the AIM section of the London Stock Exchange) is its lettings division’s compliance error. 

Back in December the Daily Telegraph broke the news that Purplebricks had - for an unspecified period of time - failed to properly serve legally-required documents to tenants explaining their deposits had been put into a national protection scheme. 

At the same time its then-head of lettings quit with immediate effect. Purplebricks put the financial liability of the error at between £3m and £9m but the Telegraph has said it could be up to £30m.

In its much-delayed release of full-year figures, just weeks ago, the agency gave scant details of the problems and has still not revealed the number of tenancies affected, nor for how long.

Instead it says: “We were disappointed to discover a process issue in our lettings business in December 2021 relating to how we had been communicating with tenants on behalf of landlords about deposit registrations and prescribed information. We acted quickly to assess the extent of any potential claims and made a provision of £3.6m accordingly. We are satisfied that this amount remains appropriate. 

“The Board recognised that it was also important to learn from the issue and therefore sought independent third-party assurance in relation to the end-to-end process and controls in the lettings business. 

“We have made significant changes in line with recommendations arising from this work, including the introduction of new processes and controls, and retraining our people. We believe that our structure now supports the delivery of our strategic goals whilst providing a better customer experience. 

“We have now employed our lettings field team, which enables us to have more control over the customer experience, compliance and capability of our people. I am confident that we will soon have the platform to establish Purplebricks as the lettings agent of choice.”

Just yesterday our sister publication Estate Agent Today revealed that Contractors 4 Justice - which is claiming to be preparing a class action against the agency over its treatment of people working under its banner in past years - has been made aware of additional issues including alleged deductions from pay and alleged cases of unfair dismissal.

Purplebricks told EAT: “These accusations from Contractors for Justice are entirely spurious and totally unfounded. Purplebricks takes very seriously its responsibilities to people working in the business and we are confident that there were no unlawful deductions from individuals’ pay. We have received no complaints about such an issue.

“We are confident that the recent performance management process followed all the correct procedures and was in accordance with the contracts of the individuals involved.”